Magazine article Occupational Hazards

Saving Millions on Chemical Management

Magazine article Occupational Hazards

Saving Millions on Chemical Management

Article excerpt

Editor's Note: Compliance Side TCM Today interviewed Jill Kauffman Johnson, executive director of the Chemical Strategies Partnership (CSP). CSP (www.chemicalstrategies.org) was founded in 1996 by the Pew Charitable Trusts with additional support from the Heinz Endowments. Whereas Compliance Side TCM (the subject of this magazine) is a perfect way for companies small and large to manage and save money on chemical usage going through the compliance side of EHS, the CSP organization seeks to reduce chemical use, waste, risks, and cost through the transformation of the chemical supply chain (redefining the way chemicals are used and sold). In fact, companies can and may be well advised to implement both Compliance Side TCM and a CSP-styled "supply side" chemical management solutions for "cradle-to-grave" coverage. In this interview, the CSP executive director provides insight into her San Francisco-based non-profit's work.

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CSTCM Today: You call your model Chemical Management Services. What is CMS?

JKJ: CMS is a strategic, long-term relationship in which a customer contracts with a service provider to supply and manage chemicals and related services. CMS providers work with manufacturers to help redefine the way they purchase and manage their chemicals. Instead of purchasing chemicals, manufacturers buy chemical services--things like assistance in purchasing, managing and tracking chemicals.

CSTCM Today: How much is CMS saving companies?

JKJ: CMS customers surveyed for our 2004 study, including United Technologies Corporation, General Motors, DaimlerChrysler, Delta Airlines, Seagate Technology, and Boeing, are realizing annual savings ranging from 5 to 25 percent per year and significant environmental benefits from reduced chemical volume, reduced emissions, reduced risk and better data for reporting.

CSTCM Today: Is CMS a new concept?

JKJ: Actually, it's right in line with business trends we're seeing elsewhere. IBM makes its money on the service side. Xerox doesn't sell you copiers anymore; they sell you a monthly service package.

CSTCM Today: A key concept is having someone responsible for CMS on site?

JKJ: We're talking about having people on the floor saying, "Do you really want to dump the (chemical) bath three times a day, or is once enough?" That person is looking at process efficiency in terms of manufacturing applications.

CSTCM Today: What kind of reaction does CMS get from chemical users?

JKJ: They love the idea. The premise around CMS is you're aligning incentives between the customer and supplier. Traditionally, the supplier wins by selling more chemicals. We're trying to promote a new business relationship where the supplier continues to make money but by selling fewer chemicals.

CSTCM Today: Why would a chemical supplier want to sell fewer chemicals?

JKJ: CMS is the one bright light in the chemical industry, which is seeing a steady decline in profitability. Our 2004 study found the CMS market has grown roughly 50 percent since 2000 to approximately $1.2-billion. All indicators point to continued steady growth. We're estimating the potential of the U.S. CMS market is approximately $17- to $19.5-billion.

CSTCM Today: What's been key to the success of CMS?

JKJ: We're finding that really strong IT systems are driving a lot of these improvements. …

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